Economics

Richard Y. Roberts, commissioner of the U.S. Securities and Exchange Commission for five years through July 1995, joined Reid & Priest. He'll work in the business, finance, infrastructure, government, utility and energy segment of the firm.

El Paso Energy International Co., a unit of El Paso Energy Corp., named a six-man management team, pulled from international operations and the recently acquired Tenneco Energy. Byron Kelley will be executive v.p.; John R. Cunningham will be v.p.-administration, engineering and asset management; William S.

Flexible prices make markets hum,

but discounts discriminate when monopolies rule.

Many expect that the electricity industry is moving inexorably toward a much-publicized "new competitive era." Companies, regulatory officials and experts all regard the momentum as powerful.

So far, the changes are just beginning, and there is a long way to go to reach fully effective competition. %n1%n Yet even at this early stage, the merger and pricing strategies adopted by the established electric firms may be threatening the prospects for competition.

Jay P. Lukens, formerly a principal at Energy Market Economics, Inc., was hired by The Economic Resource Group, Inc., as managing director and principal of the company's new Houston office.

Edison Source tapped Aram G. Sogomonian, a former executive at Enron Capital and Trade Resources as its new corporate risk management v.p. Sogomonian was Enron's director of risk analytics and asset price, and also has worked at Unocal.

Larry Grossman, a senior v.p. at Cassidy & Associates, was retained by the Council on Superconductivity for American Competitiveness as executive director.

Models can overcome a key oversight (em

that both supply and demand affect competition.

This past December, the Federal Energy Regulatory Commission (FERC) issued a policy statement describing important changes in how it will evaluate proposed mergers under the Federal Power Act's public interest standard. These changes should lead to significant improvements (em not only in the evaluation of mergers, but also for other matters that affect market power, %n1%n including industry restructuring and market-based pricing.

American National Power announced three executive changes: Joseph E. Cofelice, senior v.p., was given the added post of COO; Jim Murray, senior v.p., was given additional duties of CFO; and David L. Coke, director-asset optimization, was promoted to operations v.p.

Peter W. Delaney, a cost-cutting commissioner in the New York Office of General Services, was appointed senior v.p.-business services at the New York Power Authority. The Authority also promoted Gerard V. Loughran, a principal attorney, to v.p.-human resources.

The Institute of Gas Technology (IGT) elected Roger A.

What do the first months of trading say about the spread between spot markets and futures prices?

ust over nine months ago the New York Mercantile

Exchange opened trading in the first-ever electricity futures contracts. As occurred

previously in oil and gas, futures trading in electricity

promises to play a central role in

commodity markets (em markets that are gradually evolving as competitive.

Electricity futures also provide a valuable tool for managers at utilities or other power producers.

"Utility mentality" has become synonymous with a clinging dependence upon regulation to protect an organization from risk and competition. It also denotes momentum planning and management (em that is, using past performance to project future performance. This way of thinking made sense when companies could count on regulators to shield them from market forces and competition.

On January 1, 1998, California will "deregulate" the state's electric utilities. The Western Power Exchange (WEPEX) and the independent system operator (ISO) will start up, creating an open market for wholesale power.

Elizabeth A.

Generation: Big orDistributed power may turn

heads, but economics points

to central plants.

By Joseph F. Schuler, Jr.

By 2010, distributed power technologies will make up as much as 30 percent of new electric generation.

In telecommunications, regulators turn increasingly to the nebulous term known as "cost-based" to set pricing policy. An example is the new Telecommunications Act of 1996 (Act), whose pricing standards for interconnection and network element charges stipulate that the just and reasonable rate for the interconnection of facilities and equipment should be "based on the cost ...